Direct and spillover effects of a new tramway line on the commercial vitality of peripheral streets. A synthetic-control approach

TL;DR

This study assesses the direct and spillover impacts of a new tramway line on retail density in Florence, Italy, using synthetic control methods to analyze spatial effects and interference in urban infrastructure projects.

Contribution

It introduces a novel application of synthetic control group methods to evaluate direct and spillover effects in urban transport infrastructure with interference considerations.

Findings

The tramway increased retail density on the treated street.

Spillover effects positively influenced neighboring streets.

Methodological framework for causal inference with interference in urban studies.

Abstract

In cities, the creation of public transport infrastructure such as light rails can cause changes on a very detailed spatial scale, with different stories unfolding next to each other within a same urban neighborhood. We study the direct effect of a light rail line built in Florence (Italy) on the retail density of the street where it was built and and its spillover effect on other streets in the treated street's neighborhood. To this aim, we investigate the use of the Synthetic Control Group (SCG) methods in panel comparative case studies where interference between the treated and the untreated units is plausible, an issue still little researched in the SCG methodological literature. We frame our discussion in the potential outcomes approach. Under a partial interference assumption, we formally define relevant direct and spillover causal effects. We also consider the ``unrealized'' spillover effect on the treated street in the hypothetical scenario that another street in the treated unit's neighborhood had been assigned to the intervention.